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Andorra

Andorra country brief

Introduction

Andorra is a landlocked country in the Pyrenees mountain range between Spain and France. It is the fifth-smallest country in Europe by both area and population (approximately 468 square kilometres in size; population in 2012 of 85,082). One-third of the population are Andorran citizens and eligible to vote. The dominant ethnic group is Spanish (43 per cent), followed by Portuguese (11 per cent) and French (7 per cent). The official language is Catalan, with French and Spanish widely spoken. Roman Catholicism is the predominant religion.

Bilateral relations

Australia established diplomatic relations with Andorra in 1998, with accreditation through the Australian Embassy in Madrid. As an indication of the growing bilateral relationship, a Tax Information Exchange Agreement was signed in 2011. Parliamentary Secretary for Foreign Affairs, Richard Marles, visited Andorra in April 2012, the first such high-level visit from either side.

Australia's economic relations with Andorra are minimal and official statistics are not recorded.

History

The Principality of Andorra is one of the oldest countries in Europe. However, centuries of isolation meant that, until recently, it was relatively removed from the mainstream of European history and shared significant ties only with France and Spain. Expansion in tourism and telecommunications since the 1970s has gradually opened it up to the rest of Europe.

Andorra's official history began with a charter granted by Charlemagne in 805 as a reward for resistance against the Moors. The territory then belonged to the Diocese of Urgell in north-west Catalonia, which signed a defence agreement with the neighbouring French Count of Foix in 1095 in order to protect the territory from external aggression. In 1278, the Mediation of Aragon formalised the power-sharing arrangement between the Bishop of Urgell and Count of Foix (the two princes), giving Andorra the territorial and political form it holds today as a principality. In 1589, when the Count of Foix was enthroned as King of France, the role of co-prince of Andorra passed to the French monarchy. After the French Revolution, it passed to the French presidency.

Andorra was an independent feudal protectorate from 1278 to 1993, when the country's first written constitution was ratified, creating a modern system of government and establishing the principality as a parliamentary democracy. Andorra has since moved to become an active member of the international community, including through membership of the United Nations, the Council of Europe and the Organization for Security and Cooperation in Europe. Andorra, though not a member of the European Union, uses the euro as its currency and enjoys a 'special relationship' with the EU.

Politics and Government

Andorra is a constitutional diarchy and parliamentary democracy. Its heads of state – co-princes – are the President of France, François Hollande, and the Bishop of Urgell (based in the neighbouring Spanish town Seu d'Urgell), Joan Enric Vives i Sicília. The role of the co-princes is largely ceremonial.

Parliamentary terms in the General Council (Andorran parliament) are four years, with half the counsellors elected in equal numbers from the seven administrative parishes, and the other half from a single national constituency. The head of government (Prime Minister-equivalent) is Antoni Martí Petit, whose broad centre-right coalition, Democrats for Andorra, came to power in April 2011, taking 21 of the country's 28 parliamentary seats.

Martí ran on a platform of economic reform, though he had opposed the introduction of Andorra's first-ever direct tax system. His government has passed a number of measures including new rules governing banking transparency and, more controversially, the introduction of personal and company taxation and a goods and services tax. While Martí's large majority provides stability and a mandate for change, the eurozone crisis has taken its toll, and the introduction of new taxes has caused domestic discontent. The central challenges for the principality remain fiscal reform, restoration of economic growth, and managing its relations with the EU, France and Spain.

Economic overview

Andorra is prosperous, with a standard of living roughly equivalent to Finland. Finance accounts for 15-18 per cent of GDP, but tourism is the mainstay of the economy, representing over 80 per cent of Andorra's GDP. Approximately 9 million people visit Andorra each year. Andorra's earlier status as a premier duty-free shopping destination has somewhat declined, with the liberalisation of the French and Spanish economies. Although Andorra does not have its own railway or airport, it remains a popular destination for skiing and is noted for its summer and winter resorts.

As only 2 per cent of Andorra's land is arable, it relies heavily on imports of food and other goods. Spain and France are its main trading partners. Spain buys nearly 70 per cent of Andorra's exports and provides 61 per cent of its imports; France takes 15 per cent of Andorra's exports and provides 28 per cent of its imports.

Reliance on European tourism and use of the euro has exposed Andorra to the eurozone debt crisis, resulting in a downturn in recent years, with tourist numbers falling by 10 per cent in 2011 and the economy contracting by 1.8 per cent.